A 15 Percent Increase in the Price of Cookies Results

question 24

Multiple Choice

A 15 percent increase in the price of cookies results in a 9 percent decrease in the quantity of cookies sold.The revenue received by cookie suppliers will ________ because the price elasticity of demand for cookies is ________.

• A) decrease; inelastic
• B) increase; elastic
• C) decrease; elastic
• D) not change; unitary elastic
• E) increase; inelastic

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Definitions:

North American Free Trade Agreement

A trade agreement between Canada, Mexico, and the United States to reduce trade barriers and promote economic cooperation.

Domestic Producers

Refers to companies or individuals that manufacture or produce goods within their country of residence.

Markets

Venues or systems within which commercial transactions between buyers and sellers take place, involving goods, services, or securities.

Dominican Pesos

The official currency of the Dominican Republic, used for all financial transactions within the country.